Canadian dollar managed to advance against its US counterpart on Friday after the release of fairly positive economic data from Canada, while sentiment was still under the influence of FED stimulus speculation.
USD/CAD fell off a session high at 1.0499 at 12:28 GMT to 1.0474 at 12:34. Support was expected in the range 1.0445-1.0465, while resistance was to be encountered in the 1.0500-1.0525 zone.
Minutes ago it was reported that Canadian economy registered the slowest rate of increase in four months in April, as sector of services recorded a moderate increase, while construction activity marked the weakest results since the beginning of recession in 2009. Oil and gas production shrank at the most significant rate for the past 2 years. Canadian Gross Domestic Product rose by 0.1% in April to 1.57 trillion CAD on a monthly basis, in line with expectations, but decelerating in comparison with March, when GDP grew by 0.2%. In January and February Canadian economy expanded by a rate of 0.3%. Speaking in annual terms, GDP rose by 1.4% in April, again meeting preliminary estimates, while during the preceding period it climbed by 1.7%.
Additionally, Industrial Production Price Index in Canada remained without change in May, as higher oil and coal prices were neutralized by slowing prices of metallic and wooden products. Experts had projected a rise by 0.1%, while in April this index was revised down to -0.9% from -0.8%. Oil product and coal prices were moderately higher, by 1.1%, following two consecutive months of decline. Gasoline prices rose by 3.6% in May on a monthly basis. In the mean time, producer prices, excluding energy costs, decreased by 0.2%.
Ultimately, Raw Materials Price Index in Canada increased by 0.2% in May on a monthly basis, below the projected 0.4%, while in April index value was revised down to -2.4% from -2.2% previously.
Meanwhile, demand for the US dollar was supported on expectations that the Federal Reserve will maintain its easing measures. It also became clear, that Federal Reserve officials are still attempting to reduce the damage, inflicted by Ben Bernankes statement on June 19th, which has dominated market sentiment for the past several trading days. Officials said that investors overreacted to FEDs plans on stimulus.
On Thursday the Department of Labor in the United States reported that the number of people, filed for unemployment assistance, in the country decreased to 346 000 during the week, ending on 22.06.2013. Experts had projected that jobless claims would fall to 345 000. In addition, Pending Home Sales in the US increased in May, reaching a six-year high. The index rose by 6.7% in May from a revised down -0.5% in April.
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